Our biases, lifestyles and personal experiences can shape—and sometimes distort—the way we think about retirement. These misconceptions can create real barriers to effective financial planning and may keep you from the retirement you actually want.

Myth #1: Social Security Benefits Cannot Be Taxed

This is one of the most widespread misconceptions in retirement planning. According to research by The Senior Citizens League (TSCL), 51% of retired and disabled taxpayers surveyed said they did not expect to pay taxes on their Social Security benefits.

Many retirees believe Social Security is tax-exempt because it historically was—until the 1983 Amendments to the Social Security Act changed that. Beginning in 1984, a portion of Social Security benefits became subject to federal income taxes.

According to the IRS, up to 50% of your benefits may be subject to federal income tax if you fall into one of the following categories:

• Single filers, heads of household, qualifying widows/widowers or married filing separate, with income between $25,000 and $34,000.
• Married filing jointly with $32,000 to $44,000 income.

Up to 85% of your benefits may be subject to federal income tax if you fall into one of the following categories:

• Filing single, head of household, married filing separate or qualifying widow(er) with income above $34,000.
• Married filing jointly with income above $44,000.

To calculate your taxable amount, the IRS says to take half of the Social Security income you collected during the year and add it to your other income, including pensions, wages, interest, dividends and capital gains. Overlooking this can lead to costly surprises at tax time. It's worth consulting a tax professional to fully understand your retirement tax picture.

Myth #2: Medicare Will Cover All of Your Health Care Costs

Medicare covers many basic health care needs, including some preventive services, but it has significant gaps. Most notably, Original Medicare does not cover most dental, hearing or vision services. It also doesn't cover care received outside the United States or most long-term care services.

Medicare isn’t entirely free. While most individuals qualify for premium-free Part A if they’ve earned enough work credits through their employment history, Original Medicare (Parts A and B) still involves costs such as Part B premiums, deductibles and coinsurance. Based on 2026 Medicare costs from medicare.gov:

• Part A: No premium for most people (provided Medicare taxes were paid long enough while working), but a $1,736 deductible applies for each inpatient hospital benefit period before Original Medicare begins to pay.
• Part B: A monthly premium of $202.90 (or higher, depending on income), plus a $283 annual deductible before Original Medicare starts to pay. Premiums can increase year-over-year.

Health care is one of the most significant and often underestimated expenses in retirement. If you're approaching retirement, speaking with a Certified Financial Planner can help you understand and prepare for these costs before they catch you off guard.

Myth #3: You Can Always Work Longer to Make Up the Difference

When people feel underprepared for retirement, a common fallback is to simply plan on working longer. While that might sound reasonable, it's a risky strategy because life doesn't always go according to plan.

According to 2024 research from the Transamerica Institute, approximately 58% of workers retire earlier than they expected. Of those who retired ahead of schedule, 46% did so for health-related reasons and 43% due to employment issues such as job loss or workplace changes. Only 21% retired early because they were financially able to do so.

Relying on the ability to work longer as your primary retirement strategy leaves you vulnerable to circumstances outside your control. A more reliable approach is to save consistently and work with a financial planner to build a retirement timeline that doesn't depend on everything going perfectly.

Myth #4: I Won’t Know How to Spend My Time in Retirement

It's natural to worry about losing the structure, relationships and sense of purpose that come with work. But research suggests that most retirees are far more satisfied than they expected to be—even when their finances aren't perfect.

According to data from the Center for Retirement Research, 92% of retired households report being “very satisfied” or “moderately satisfied” with their retirement—even among those who say they wish they had saved more. In fact, the data suggests a relatively weak link between financial circumstances and overall retirement satisfaction.

Additionally, 86% of retirees associate retirement with positive concepts like freedom, fulfillment and reduced stress. If boredom were truly a defining feature of retired life, we’d expect it to show up much more prominently in how retirees describe their experience.

For those who do want to stay engaged, the options are plentiful: learning a new language, joining a sports league, pursuing a hobby or exploring a creative outlet are just a few ways retirees find meaning and connection.

Know Your Own Retirement Myths

Recognizing the assumptions that shape your retirement outlook is the first step toward building a plan that actually works for you. Whether it’s taxes, health care costs, job security or lifestyle concerns, understanding the reality behind these myths can make a meaningful difference in how you prepare.

The Busey Wealth Management team is here to help you navigate your retirement questions and build a personalized plan. To find an advisor near you, visit busey.com/wealth-management.

This is not intended to provide legal, tax or accounting advice. Any statement contained in this communication concerning U.S. tax matters is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties imposed on the relevant taxpayer. Clients should obtain their own independent tax advice based on their particular circumstances.

This material is provided for educational purposes only and should not be construed as investment advice or an offer or solicitation to buy or sell securities.

This presentation is for general information purposes only. It does not take into account the particular investment objectives, restrictions, tax and financial situation or other needs of any specific client.